Slowing growth makes the economy more sustainable

Liu Ligang (Director of ANZ China Economic Research) China's GDP grew by 10.3% in the two quarter, slightly below market expectations, but better than the forecast for the previous 10%. At the same time, economic growth of 11.1% in the first half shows that China's economy is still strong. The June CPI inflation unexpectedly fell to 2.9%, 0.2% lower than last month, and PPI slowed to 6.4%.　　Despite a brief fall in inflation, the CPI will not rule out a return of more than 3% per cent in the coming months, as pork prices have risen again recently and floods in the South have affected agricultural harvests. According to data released yesterday, China's economy has been largely excluded from the two dip in the bottom, we maintain the Chinese economy growth of 10.1% this year forecast, the third and fourth quarter GDP growth rate of about 9.5% and 9%, despite a certain slowdown in growth, but in fact 9%-9.5% more sustainable. In our view, China's macroeconomic policy orientation is less likely to be "turned" or "relaxed".　　The National Bureau of Statistics also expressed the same opinion in yesterday's official stance. At the same time, we believe that the possibility of interest rate adjustments in the second half is still greater. The "quantitative tightening" of the first half of the year has already received significant liquidity effects, but the quantitative adjustment is not enough to dampen strong demand, and therefore it is difficult to fundamentally eliminate the risk of inflation.　　Because of real negative interest rates, savers will be forced to put their assets into High-yield investment vehicles such as real estate, which will create a certain level of bubble risk. (Morning paper reporter Liu Zhifei finishing)